As suspected, the Commission has appealed Duka and Bebo is front and center. The Commission as asked the district court to stay the preliminary injunction pending appeal. In addition to the "inferior officer" issue, the Commission asserted:
- To start, the district court lacks jurisdiction over this matter, as the Seventh Circuit recently held in a case involving constitutional challenges to an SEC administrative proceeding (including an Article II challenge to the presiding ALJ). Relying upon the Supreme Court’s decisions in Elgin v. Department of Treasury, 132 S. Ct. 2126 (2012), and Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010), the Seventh Circuit ruled that it is “fairly discernible” from the securities laws that “Congress intended plaintiffs [bringing Article II challenges to SEC administrative proceedings] ‘to proceed exclusively through the statutory review scheme’ set forth in 15 U.S.C. § 78y.” Bebo v. SEC, -- F.3d --, 2015 WL 4998489, at *1 (7th Cir. Aug. 24, 2015) (quoting Elgin, 132 S. Ct. at 2132-33). In so ruling, the Seventh Circuit rejected the basis upon which this Court found jurisdiction, holding instead that judicial review is not inadequate merely because it occurs after the allegedly unconstitutional administrative proceeding had taken place. Id. at *9. The Seventh Circuit’s decision is in accord with binding Second Circuit precedent, as the Second Circuit has held that the securities laws generally require respondents in SEC administrative proceedings “to bring challenges in the Court of Appeals or not at all.” Altman v. SEC, 687 F.3d 44, 45-46 (2d Cir. 2012) (per curiam). In accordance with Altman— which this Court did not cite—the only other judges in this Court to have considered the precise question here have likewise held that they have no jurisdiction. See Tilton v. SEC, No. 1:15-cv- 02472, 2015 WL 4006165 (S.D.N.Y. June 30, 2015) (Abrams, J.), appeal pending, No. 15-2103 (2d Cir.); Order, Spring Hill Capital Partners, LLC v. SEC, No. 1:15-cv-04542, ECF No. 23 (S.D.N.Y June 29, 2015) (Ramos, J.). In light of this overwhelming precedent, the SEC is likely to prevail on the jurisdictional issue.
So it may but this only postpones the ultimate day of reckoning. This saga is destined to continue.